Largest US hospice company sued for Medicare fraud

Sen. Don Gaetz

News Herald file photo

By Tom McLaughlin / Daily News

Published: Thursday, May 9, 2013 at 02:55 PM.

A lawsuit filed by the U.S. Department of Justice asserts that Vitas Hospice Services, a company founded in 1983 by a group that included state Senate President Don Gaetz, submitted fraudulent bills for Medicare payment.

The lawsuit alleges that for 12 years Vitas “violated the False Claims Act and misspent tens of millions of taxpayer dollars” by billing Medicare “for ineligible patients and inflated levels of care,” a Department of Justice news release said.

Gaetz said Thursday that he has not been contacted about the complaint and was not a party to it.

“I have no direct knowledge of the complaint that’s been made, but it is heartbreaking to see a company I helped found involved in something like this,” he said.

Vitas is the largest hospice care chain in the country.

The Justice Department claims the Medicare fraud was occurring in 2001, three years before Gaetz and his partners sold the company.

But Gaetz said he remained active in the management of Vitas only until 2000. He stepped aside that year when he was elected superintendent of the Okaloosa County School District.

A lawsuit filed by the U.S. Department of Justice asserts that Vitas Hospice Services, a company founded in 1983 by a group that included state Senate President Don Gaetz, submitted fraudulent bills for Medicare payment.

The lawsuit alleges that for 12 years Vitas “violated the False Claims Act and misspent tens of millions of taxpayer dollars” by billing Medicare “for ineligible patients and inflated levels of care,” a Department of Justice news release said.

Gaetz said Thursday that he has not been contacted about the complaint and was not a party to it.

“I have no direct knowledge of the complaint that’s been made, but it is heartbreaking to see a company I helped found involved in something like this,” he said.

Vitas is the largest hospice care chain in the country.

The Justice Department claims the Medicare fraud was occurring in 2001, three years before Gaetz and his partners sold the company.

But Gaetz said he remained active in the management of Vitas only until 2000. He stepped aside that year when he was elected superintendent of the Okaloosa County School District.

“I told my partners I was interested in becoming superintendent of schools, and when I got elected I said I was stepping back,” said Gaetz, who lives in Niceville. “I gave up all management responsibilities in 2000, though I continued as a shareholder and attended about four board meetings a year.”

In 2004, Gaetz and fellow Vitas founders Hugh Westbrook and Esther Colliflower sold their stock in the company to Cincinnati-based Chemed for $406 million.

The Justice Department alleges Vitas Hospice and Vitas Healthcare submitted claims for unneeded emergency services for patients or services that weren’t provided, the Associated Press has reported. The companies pressured their employees to submit more claims to get more revenue, the AP said.

Gaetz said he is not clear on the merits of the case against Vitas Hospice Services LLC, Vitas Healthcare Corp. and Chemed.

“My understanding is that the owners and operators of the company are aggressively denying the complaint,” he said.

Gaetz said he recognizes that different management priorities can evolve when a conglomerate takes over a company from its founders.

“I would say there are people who are still caring employees of Vitas that were there when I was involved,” he said. “They are good people that I feel bad for, having to defend against this complaint.”

An Associated Press version of this story is posted below:

FORT LAUDERDALE, Fla. (AP) — The Department of Justice is suing the hospice company founded by Florida's Senate president, accusing it of submitting tens of millions of dollars in fraudulent Medicare claims for more than a decade, including while Don Gaetz was vice chairman of the board.

Vitas Hospice and Vitas Healthcare submitted claims for emergency services for patients that weren't needed, weren't provided, or were provided to patients who weren't eligible under Medicare requirements, according to the DOJ. The companies set goals for the number of crisis-care days to be billed and pressured their employees to submit more claims so it would get more revenue, the lawsuit said. The agency said Medicare payments for crisis care can be hundreds of dollars greater than typical hospice care payments.

Vitas is the largest U.S. hospice care chain, and its parent company Chemed Corp. said the claims go back to 2002, two years before it acquired the company.

Gaetz told The Associated Press on Thursday that he has not been involved with the management of the company for about 13 years, saying he gave up a management role in 2000 when he became Okaloosa County's school superintendent. He founded the company in the early 1980s with Rev. Hugh Westbrook, a Democratic activist, and Esther Colliflower, a nurse. Starting with an $1,800 investment, they turned Vitas into the largest company of its kind before selling it for millions to Chemed in 2004. That's made Gaetz, R-Niceville, one of the Legislature's wealthiest members with a net worth of about $25 million.

"I continued to be a shareholder and member of the board of directors until the company was sold in 2004," he said, adding that he doesn't currently "own a single share of stock and I have no role with the company in any capacity."

Gaetz was vice chairman of the board during part of the time that federal investigators allege the fraud took place, but he said he had no "role in the operation of the company" when he served as vice-chair.

"It's heartbreaking to see an organization which I remember as one of the formative change agents in end-of-life care in this country having to deal with a complaint like this but it's not something that I have any knowledge of or any connection with," he said.

Chemed said in a statement that it will fight the lawsuit "vigorously."

The lawsuit was filed Thursday, the night before the Florida session ended. The next day, shares of Chemed lost $14.27, or 17.5 percent of their value, to $67.52 in afternoon trading.

The Justice Department says Medicare reimburses hospice care for patients who are suffering from a terminal illness and who are expected to live six months or less if the disease progresses at its normal rate. Patients receiving hospice care are treated for pain and stress and symptoms but don't receive treatment for their illnesses. Those patients can get "crisis care" if they need immediate, short-term care from nurses or else hospitalization will be required.

The department says the crisis care rate is the highest daily rate a hospice can bill Medicare.

"The government contends that Chemed and Vitas violated the False Claims Act and misspent tens of millions of taxpayer dollars from the Medicare program," the Justice Department said in a news release.

Cincinnati-based Chemed said the government can seek statutory penalties, costs, and triple damages. Those are typically allowed in whistleblower lawsuits.

"Chemed and Vitas have made significant investments in controls, systems and procedures to uphold the highest industry standards and to maintain compliance with all regulatory requirements," the company said. "Our compliance efforts are designed to ensure our services are provided only to eligible patients."

Medicare fraud costs taxpayers an estimated $60 billion a year and federal officials frequently point to Florida, particularly South Florida, as ground zero for the complex scams.

Florida Gov. Rick Scott was ousted from his role as CEO of Columbia/HCA after a Medicare fraud investigation led to the company paying a $1.7 billion settlement.